The French rule, which allows a bank to require a borrower – in return for an individualised advantage – to direct their salary or similar income to a payment account for a period fixed by the loan contract, are not in conformity with European Union law, said Advocate-General Henrik Saugmandsgaard Øe in his Opinion delivered on Thursday 27 February (Case C-778/18).
A dispute has arisen between the Association française des usagers de banques (AFUB), a consumer association, and the French State concerning the legality of a decree of June 2017 which lays down, in the French Consumer Code (Article L.313-25-1), the period of up to 10 years during which a lender may require a borrower to direct their income to a bank account.
AFUB brought an action before the French Conseil d'État for annulment of the contested decree which, in its view, infringes the objective of banking mobility enshrined in several European directives (2007/64, 2014/17, 2014/92 and 2015/2366). Credit institutions are allowed to attach such advantages to the direct debit that renouncing it would effectively be prohibitively expensive for the borrower, thus hindering their banking mobility.
The French Conseil d'Etat has referred a question to the Court for a preliminary ruling on the conformity of French legislation with EU law.
In his conclusions, Mr Saugmandsgaard Øe takes the view that national rules permitting tied selling – whereby the lender may require the borrower to have all their income from wages and salaries or similar income domiciled in a payment account for a period laid down in the loan agreement, in return for an individualised advantage – are not in conformity with Union law.
This account can be used by the borrower to carry out daily payment transactions (remittance, transfer and withdrawal of funds).
Similarly, the French legislation is not authorised in so far as it does not ensure, first, that tied selling has obvious advantages for the consumer and, second, that this assessment is made with due regard to the availability and price of the financial products in question offered on the market.
On the other hand, in the view of the Advocate-General, Union law does not preclude legislation under which the closure of an account opened by the borrower with the lender for the purpose of domiciliation of their income entails the loss of the advantage associated with that domiciliation, if the closure takes place before the expiry of the period laid down in the contract.
See the findings: http://bit.ly/3ccQyDR (not available in English) (Original version in French by Mathieu Bion)